The engagement is still on. President Obama and Secretary of State Hillary Clinton intend to pursue talks with Iran regardless of who is in power.
Even though it is clear this "election" is a total sham the Obama Administration intends to reward the behavior of the Iranian government. By rewarding that behavior, Ahmadinejad and company have no reason to change their ways. If they will get an audience with Obama and Hillary by killing peaceful demonstrators why change now?
Hillary justified engagement with Iran by saying it was what we did with the former Soviet Union:
We never stopped negotiating with the former Soviet Union. They invaded countries. They promoted unrest. But we knew we had an opportunity to learn more, to discuss fully and perhaps to reach better understanding than we might have in the absence of such engagement. So we pursued it.
Hmmm, I don't recall Reagan negotiating with Brezhnev, Andropov or Chernenko. Only when Gorbachev began his reforms did Reagan undertake any negotiations with the Soviets. Let it never be forgotten that Reagan negotiated from a position of strength unlike Obama and Hillary want to negotiate for the sake of negotiating.